Port authority has new tools to woo business

The Virginia Port Authority has lost its share of battles with rival ports over big distribution facilities.

During an agency strategy session on Tuesday, officials were briefed on a new power bestowed by the General Assembly that could could turn the tide in such recruitment fights by giving it increased tools to woo businesses and gain the associated boosts to port traffic and jobs.

A large port-related bill passed in April, and it included a provision granting the port authority the legal powers of an industrial development authority, which include a tool to counter those states that dangle tax breaks in front of businesses picking new facility locations.

"It seems South Carolina has been very aggressive in that arena," said Joe Ruddy, CEO of Virginia International Terminals, the state's terminal operating arm, which is in the process of being formally consolidated into the VPA structure.

That state's Port of Charleston represents one of the biggest competitors to the Port of Virginia, and one of the ways the two ports compete is trying to attract new port-related businesses to their respective regions.

Before going into a lengthy closed session, Sandi McNinch, general counsel with the Virginia Economic Development Authority, told VPA's Board of Commissioners and VPA and VIT staffers that Virginia as a whole fights with one hand behind its back because state law prevents the offering of tax abatements — reduced tax rates or exemptions often offered as parts of packages to woo businesses to a location.

But she said the state's industrial development authorities — and now the port authority — can match tax abatements offers from other states by offering businesses tax offsets in the form of grants.

"It's not elegant," McNinch said, but "it's all perfectly legal."

Another new tool allows the agency to grease the skids for businesses interested in securing low-interest loans, she said.

Long the province of municipal economic development offices, industrial development bonds can be secured by companies to finance "new construction" projects and the purchase of new equipment used in manufacturing, McNinch said.

"It has huge potential for the port really," said Jeff Florin, VPA's deputy executive director for operations during a break in the strategy meeting.

"But we've got to get together with the localities," he added, to make sure not to step on their toes.

Localities have for years collected fees based in exchange for facilitating low-interest loans to companies and charities, said McNinch, and they are likely to seek legislative action to protect that revenue source.

There are companies out there "seeking bond money (that) shop around," said Ruddy, VIT's CEO, "so that's their fear that we might start undercutting their rates."

"We're not out to compete," said Russell Held, VPA's deputy executive director for development.

"They believe us, but that's not their point: they want to make sure that doesn't happen," Held said.

McNinch said an effort was almost certain during the next General Assembly session to prevent bond-cutting by forcing VPA and a state agency with similar powers to share fees it collects related to low-interest loans with the locality where a business is operating or moving to.